Suppose you are interested in starting a pet store business. In that case, this review of the Pet Supplies Plus franchise’s initial starting cost and overall profit potential of this franchising system can be a first stop in making that possible.
Key Takeaways:
- Pet Supplies Plus is a leading brand in the Pet Industry established in 1988 in Michigan which core business is to offer pet food, accessories, and grooming services.
- Launching the new Pet Supplies Plus franchise demand start-up capital between $454,870 and $1,524,200; this estimation includes an Initial Fee of $49,900 and all other pre-operating costs that will occur before opening.
- The average earning Pet Supplies Plus franchise location makes approximately $2,700,000 in gross sales with a 7% profit margin.
- Pet Supplies Plus franchise owners who operate average-earning stores can expect to make $190,000 in salary per year.
- Every franchise applicant must have $200,000 in Liquid Assets(cash) and a Net Worth of at least $600,000 to be approved as a new franchisee of this brand store.
What is Pet Supplies Plus
Pet Supplies Plus is a well-known pet brand established in 1988 in Michigan that offers a wide variety of pet food and other supplies for small animals, birds, reptiles, and fish, along with pet grooming and bathing services.
This brand has offered franchising opportunities for interested investors since 1990. Currently, more than 600 of these pet stores are presented in the United States, and their numbers are growing daily.
This company has generated more than $2 billion of sale revenue in 2021, and they are part of the booming pet industry that will, by some estimation, have revenue of 23.7 billion U.S. dollars by 2027.
This brand is today the pet industry leader, and starting Pet Supplies Plus franchised store is one of the best investment opportunities for aspiring franchise owners.
How Much Does The Pet Supplies Plus Franchise Cost
The total cost to launch a new Pet Supplies Plus franchise is between $454,870 and $1,524,200. The estimation of necessary start-up capital includes the franchisor’s Initial Fee and all other expenses that will occur before opening day.
This franchisor also offers a Multi-Unit Agreement, and investors who opt to own and operate more than one store can benefit from reduced starting costs!
To begin the operation under the multi-unit agreement, it is necessary to invest between $404,970 and $1,474,300 for the first store.
Available types of franchise locations:
- Traditional locations: Stores located in a retail facility in sound condition, of approximately 3,000 to 8,000 square feet, with a start cost between $454,870 and $1,524,200
- Conversion locations: Already established retail pet stores that convert their location to a Pet Supplies Plus franchise; this type of deal demand an investment between $454,870 and $715,000($0 for the Initial Fee)
The Pet Supplies Plus franchise’s highest initial expense is related to leasehold improvements; it will be necessary to invest between $25,000 to $715,000 for arranging in-store and out-store design according to the franchisor’s requirements.
Also, every new location must obtain and maintain $160,000 to $230,000 in inventory items. Initial supplies are purchased directly from the franchisor and will be cost on the higher or lower end depending primarily on the store size.
Table of initial costs:
- Initial Franchise Fee: $49,900
- Advertising Grand Opening Fee: $20,000 to $30,000
- Set Up Fee: $10,000
- Inventory Supplies: $160,000 to $230,000
- Leasehold Improvements: $25,000 to $715,000
- Equipment Package: $126,700 to $275,000
- POS Equipment Installation Cost: $3,150 to $4,150
- Full Store Preprinted Shelf Labels for Product: $120 to $150
- Initial Training related expenses: $4,000 to $8,000
- Insurance Fees: $2,000 to $7,000
- Prepaid Rent/ Security Deposit Fees: $0 to $10,000
- Legal & Accounting Fees: $4,000 to $10,000
- Pre-Opening Labor Expenses: $10,000 to $35,000
- Additional Funds: $40,000 to $140,000 – working capital for first 6 Months after opening
- ESTIMATED TOTAL INVESTMENT COST: $454,870 to $1,524,200
Options To Fund Pet Supplies Plus Franchise Investment
Franchisor itself, as a company, does not offer direct or indirect financing, which means that the investor will need to seek SBA or any other source of third-party funding service to cover the initial costs of starting this pet store franchise.
Also, the potential franchisees must be aware that this franchisor requires that they need to have at their disposal at least $200,000 in Liquid Assets(cash) and $600,000 Net Worth if they want to be approved as the new owner.
Pet Supplies Plus Franchise Fees
One-time Fees
This franchisor charges a few one-time fees; if we combine all initial fees, we come to a total amount of $89,900. We will list all initial fees so that investors can know what to expect!
Initial Franchise Fee
- $49,900 per one store
Every new owner of Pet Supplies Plus will need to pay $49,900 for costs associated with the initial franchise fee when they sign the franchise agreement.
However, if you already operate a retail pet store that the franchisor approves for conversion to their franchise, there is no charge for Initial Fee!
Initial Fee Discount Programs
A few groups of investors have a certain discount percentage right on the cost associated with the initial fee; we will mention who they are and how much they will pay this fee.
Investors who have the right to an Initial Fee discount are:
- Existing franchisees: for the second and any subsequent stores opened, they pay an Initial Franchise Fee of $35,000.
- Veterans of U.S. Armed Forces: 20% discount on the Initial Franchise Fee; for them, this expense is $40,000.
- Firefighters, paramedics, and law enforcement officers: 10% discount on the Initial Franchise Fee; they pay $45,000.
- Employees of Pet Supplies Plus: pay a reduced initial franchise fee of $10,000; $5,000 is paid after signing the Franchise Agreement, and the remaining $5,000 is paid after executing a lease for the store.
- Multi-Unit franchise owners: pay $49,900 for the first store and $35,000 for each additional store that is started after the first.
Grand Opening Ad Fee
- $30,000 for the first store
Investors must be aware that this franchisor will also charge $30,000 for costs associated with the Grand Opening advertising campaign that the brand itself will run on the franchisee’s behalf.
Existing franchisees who opt for launching second and any subsequent stores pay $20,000 of the Grand Opening Ad Fee for every franchise that is opened after the first.
This initial expense franchisee must pay in full on the 10th day of the month in which Store set-up begins.
Set Up Fee
- $10,000 per store
Before opening, a new franchise owner must pay a so-called “Set Up Fee” of $10,000. This fee is paid in consideration of the franchisor’s on-site advisory role.
This fee must pay all new developers, which means that there are not any discount programs available regarding this initial cost!
Ongoing Fees
The Pet Supplies Plus franchise locations must spend 6.5% of their gross sales for the cost associated with the different franchisor royalties!
To show you what this means in practice, we will break down this franchisor royalties item by item. Also, we will mention how much one month’s rent fee for these pet stores.
Pet Supplies Plus Franchise Royalty Fee
- 2% of Gross Sales for the first 12 months of operation.
- 3% of Gross sales after the first 12 months of operation.
The Pet Supplies Plus Royalty Fee is charged 2% of monthly Gross Sales during the first twelve months after the franchise start with business; after that period passes, this franchisor increases it to 3% of monthly Gross Sales, and it stays the same during the whole duration of the franchise agreement!
This franchisor charges its Royalty Fee every month, which means its exact cost is calculated according to the revenue the franchised location has delivered for the preceding calendar month.
Advertising Fund Fee
- 3.5% of Gross Sales
This franchisor charge 3.5% of the pet store sale revenue for the cost associated with the marketing campaigns conducted on the local and national level.
The advertising fund fee is spent as follows:
- 2/3 toward local marketing campaigns that target customers that live near a franchise location.
- 1/3 is redirected into the National Advertising Fund, from which the franchisor pays for marketing campaigns launched on the national level.
Investors need to be aware that they will need to contribute 3.5% of Gross Sales during the whole duration of the franchise agreement, which means that this will be an ongoing business operating cost.
Monthly Rent Fee
Pet Supplies Plus franchises operate in approximately 3,000 to 8,000 square feet, meaning that franchise owners can expect to pay monthly rent between $10,000 and $15,000 for their franchised location!
However, although it can seem like an unreal price to pay approximately $150,000 per year only for landlord expenses, investors must be aware that these pet stores are huge in space.
Usually, these franchises are located in a stand-alone location or within a shopping center, and those types of business spaces are very costly to rent.
These stores are also excellent earners, and the rent cost is approximately 6% of the store’s annual gross sales. In practice, landlord expenses will be bearable and will not impact overall business profitability too much.
The data above about monthly rent fees comprise the stats this franchisor has presented in its franchise disclosure document. The franchisor collected real rent fee stats from existing franchisees, which means this information represents the most precise estimation that franchisee applicants can find.
Other Ongoing Monthly Fees
- Technology Fee: $800 to $1,200 per month
- Point of Sale (POS) Leasing Fee: $300 to $400 per month
- Grooming Scheduling Software Fee: $1,428 per year (charged at $119 per month)
How Much Is Pet Supplies Plus Franchise Profit
To determine how much the Pet Supplies Plus franchise owner can expect to make in an annual profit, we must reveal data regarding the average gross revenue and profit margin these pet stores deliver to franchisees!
Average Gross Revenue Per Year
On average, Pet Supplies Plus franchises generate to their owners approximately $2,700,000 of gross sales per year per location.
However, that doesn’t mean that immediately after opening the store, sales level will be as high as the average mentioned above!
This amount of gross sales level franchisees can expect:
- First-year after opening: $1,700,000 of Gross Revenue
- 2-3 years after opening: $2,300,000 of Gross Revenue
- 4+ years after opening: $3,000,000 of Gross Revenue
As we can see from the chart above, more years in business mean higher gross revenue!
The Pet Supplies Plus franchises that are in business for four or more years, on average, make $3,000,000 in gross revenue per year. These results are, for example, better than the sales levels that Mcdonald’s franchises deliver, and that tells a lot about how good earners are these pet stores.
Pet Supplies Plus Franchise Profit Margin
Pet Supplies Plus franchises deliver 10% of the EBITDA margin, suggesting that the franchise owner can expect his store to deliver at least 7% of the net profit margin from gross sales.
The 7% net profit margin is a pretty real estimation in cases where franchise owners hire workers(store sell personnel). If the franchisee works as a seller in his pet franchised store, it is possible to extract even more profit since payroll operating costs will be much lower!
How Much is Pet Supplies Plus Franchise Owner Salary
A franchise owner of the average earning Pet Supplies Plus franchised store can expect to make $190,000 of profit in salary per year.
These stores are one of the most profitable franchises available on the market, and this brand franchisee can anticipate to have a high paycheck at the end of the year.
However, in the first two years after the start, the profit/salary will be lower dues to the fact that the business will need time to establish a reputation among customers.
Pet Supplies Plus franchisees can expect to make:
- First-year after opening: $5,300 of franchise owner profit/salary
- 2-3 years after opening: $115,000 of franchise owner profit/salary
- 4+ years after opening: $240,000 of franchise owner profit/salary
The franchise owner’s salary is correlated with gross sales, and since “mature” franchises have a higher level of sales per year, they make more profit to their owners than a store that has just started a business.
How We Estimate Pet Supplies Plus Franchise Owner Salary Per Year
We estimate Pet Supplies Plus owner salary according to the gross revenue and EBITDA margin data this franchising company has revealed in their franchise disclosure document(FDD).
Let’s see what the franchisor has revealed in its FDD by summarizing important financial data!
Average Gross Revenue measured in the period of January 1, 2021, to December 31, 2021:
- 1-Year-old stores: $1,788,684
- 2-3 Years old stores: $2,300,319
- 4+ year old stores: $3,022,650
- Average of All Stores: $2,765,127
The franchisor has collected data about gross sales from its 248 existing franchised outlets that operated during the whole fiscal year of 2021.
Now that we know the sales level of these pet stores, we need to implement the profit margin on the gross sales number. The franchisor in the FDD has revealed the EBITDA margin, so we used that data to estimate the Pet Supplies Plus franchise owner’s salary per year.
This franchisor, in its FDD, has revealed that their franchised stores, on average, produce a 10.0% of EBITDA margin. If we implement a 30% tax on the EBITDA, the 7% of the net profit margin is a possible result.
The formula for calculating Pet Supplies Plus owner salary per year is:
- 7% (net profit margin) of $2,765,127(average gross revenue)
- =$193,558 (owner profit)
Is it Profitable to Own Pet Supplies Plus Franchise?
Owning A Pet Supplies Plus franchise is very profitable, and with an estimated owner’s profit/salary of $190,000 per year, these brand stores present very lucrative investment opportunities.
The Pet Supplies Plus stores that are in business for four or more years deliver to their owners $240,000 of salary per year, which is more than four times higher than is average franchise owner’s salary in the United States today.
A fun fact is that food franchises, on average, deliver approximately $60,000 in profit to their owners per year, which tells a lot if an investment in this pet store is a good choice!
How Much Is Pet Supplies Plus Franchise Agreement Duration
The standard Pet Supplies Plus franchise agreement usually lasts ten years; after that period, the franchise owner can renew it for an additional ten years by paying Renewal Fee, which is currently $2,500!
Are All Pet Supplies Plus Franchises
Not all Pet Supplies Plus stores are franchises, approximately 62% of all locations are franchisee owned, and 38% of these pet stores are company/affiliate-owned.
At the end of 2021, there was a total of 603 these pet stores in the United States; 374 or 62% were franchised locations, and 229 or 38% were managed and owned directly by the franchisor or its affiliates.
Who Owns Pet Supplies Plus
Franchise Group, Inc is the owner of Pet Supplies Plus; this company acquired 2021 this brand from private equity firm Sentinel Capital Partners, L.L.C.
Franchise Group Newco PSP, LLC, a subsidiary of Franchise Group, Inc., acquired a controlling ownership interest of the Pet Supplies Plus brand in March 2021.
The Pet Supplies Plus brand was established and founded in 1987 by Harry Shallop and Jack Berry; the duo sold this brand to Sentinel Capital Partners in 2018, and since then, the founders don’t have any interest in it.
Summary
Pet Supplies Plus is a medium-cost franchise that can deliver an excellent profit to its owner. The pet food and other supplies market is growing year by year, and now seems an ideal time to start a store in this business niche.